Asia Stocks Rise on Expectation of Monetary Policy Easing

The MSCI Asia Pacific Index advanced 0.3 percent to 118.13 as of 9:18 a.m. in Tokyo before markets in China and Hong Kong opened. More than four stocks rose for each that fell. Photographer: Tomohiro Ohsumi/Bloomberg

July 3 (Bloomberg) -- Asian stocks climbed, headed for the
biggest five-day gain this year, on expectations central banks
from the U.S., China and Europe may ease monetary policy to spur
economic growth.

Mitsubishi UFJ Financial Group Inc., Japan’s biggest bank,
led gains among financial stocks. Renesas Electronics Corp.
jumped 9.8 percent in Tokyo after a report the maker of
automotive microcontrollers will announce further restructuring.
Taiwan Semiconductor Manufacturing Co., the world’s No. 1
contract maker of chips, added 1.1 percent in Taipei after
Micron Technology Inc. agreed to buy Japan’s bankrupt Elpida
Memory Inc. in the industry’s largest tieup in four years.

The MSCI Asia Pacific Index advanced 0.9 percent to 118.79
as of 7:14 p.m. in Tokyo. About three stocks rose for each that
fell. The Asian gauge last week posted its biggest weekly gain
since January after euro-zone leaders agreed to relax conditions
for recapitalizing lenders, easing concern about the debt
crisis.

“There will be more monetary easing be it in Europe, from
the Fed or in China,” said Robert Aspin, Singapore-based
investment strategist at Standard Chartered Bank. “We are
overweight global equities. Authorities in China are more
worried about the quality of growth and they can do a lot
more.”

Speculation for further easing was spurred by a report U.S.
manufacturing unexpectedly shrank in June for the first time
since the economy emerged from a recession three years ago,
indicating a mainstay of the expansion may be faltering.

Fed Action

The contraction may encourage more accommodative policies,
Princeton University economist Alan Blinder said in an interview
on Bloomberg Television’s “Market Makers” with Erik Schatzker
and Scarlet Fu.

“Data like this that keep coming in are encouraging or
strengthening the positions of the doves on the Fed,” said
Blinder, a former central bank vice chairman. “You know there’s
a big civil war going on in the Federal Reserve, weakening the
position of the hawks.”

Futures on the Standard & Poor’s 500 Index were little
changed after swinging between gains and losses of 0.2 percent
today. The gauge increased 0.3 percent in New York yesterday as
takeovers helped the market recover from earlier losses
triggered by the manufacturing contraction. Micron agreed to
acquire Elpida, an Apple Inc. supplier. Bristol-Myers Squibb Co.
said it will pay $5.3 billion for Amylin Pharmaceuticals Inc.

Europe Joblessness

Unemployment in the 17-nation euro area reached the highest
level on record as a deepening economic slump and budget cuts
prompted companies from Spain to Italy to reduce their
workforces, a report showed yesterday. This added to speculation
that central banks will add to measures unveiled by the region’s
governments to contain the sovereign-debt crisis.

The European Central Bank and the Bank of England announce
interest-rate decisions on July 5. ECB officials will lower
their benchmark rate by 25 basis points to a record low 0.75
percent, according to the median forecast in a Bloomberg survey
of 57 economists.

The China Securities Journal, a state-run newspaper, said
the time is ripe for China to cut banks’ reserve requirements as
slowing inflation gives more room for easing to stabilize
growth.

Exporters Rise

Canon Inc., a camera maker that gets nearly 60 percent of
sales from the Americas and Europe, gained 1.3 percent to 3,195
yen. Li & Fung Ltd., which gets more than 80 percent of sales in
the U.S. and Europe, gained 0.8 percent to HK$14.94 in Hong
Kong. Yue Yuen Industrial Holdings Ltd., which makes shoes for
Nike Inc., rose 1 percent to HK$24.45.

The MSCI Asia Pacific Index gained 3.4 percent this year
through yesterday, compared with an 8.6 percent advance by the
S&P 500 and a 4.2 percent increase by the Stoxx Europe 600
Index. Stocks on the Asian benchmark are valued at 12 times
estimated earnings on average, compared with 13.2 times for the
S&P 500 and 10.7 times for the Stoxx 600.

Renesas rallied 9.8 percent to 348 yen after Kyodo News
reported the company will announce restructuring plans today.
After market close the chipmaker said it will cut more than
5,000 jobs or 12 percent of its workforce.

Kawasaki Kisen Kaisha Ltd. slumped 15 percent to 134 yen in
Tokyo after the marine cargo and passenger transporter cut its
full-year profit forecast and said it will sell shares to raise
funds.